Tax service is focused on rich to help fair economy

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Tax service is focused on rich to help fair economy

The National Tax Service (NTS) on Monday said it will be tightening its auditing in support of the fair economy, in particular looking for conglomerate owners embezzling funds, evading taxes or otherwise improperly managing company finances.

“We need to act decisively against tax evasion,” said Han Sung-hee, the NTS commissioner. “And through fair taxation, we need to strengthen public trust.”

Tax agents “need to work especially to identify evasion that threatens our goal for a fair society, taking aim at the families of conglomerate owners that use corporate funds for personal purposes, wealthy people illegally passing their fortunes to heirs and high earners living well by sending funds offshore,” he added.

The national tax agency announced this year’s tax policy plan at a meeting with employees from over 200 agency branches. Finance Minister Hong Nam-ki attended.

The NTS said one of the focuses of its investigations will be tax evasion, including the running of affiliates under the names of others and the unfair awarding of contracts to subsidiaries.

It will also look into whether charitable foundations have been structured for personal use and at insider trading and abusive leases of high-end art.

One current target of investigation is the major shareholders of the Hanjin Group.

Chairman Cho Yang-ho is battling charges that he embezzled 27 billion won ($24 million), while Cho and family members, including wife Lee Myung-hee, stand accused of smuggling high-end goods and avoiding related taxes.

The tax agency said while it audits conglomerates every five years, it plans to conduct separate investigations if it finds any hint of unfair practices.

The agency said it will use the latest technology in its investigations. In the first half of the year, it will open a big-data center that will be used to track down possible tax evaders. The center will also be used to improve service efficiency.

“With the development of IT capabilities, new sources of taxation can be targeted, such as global electronic commerce transactions and one-person media,” Han said. “But at the same time, the tax cheats are becoming more intelligent.”

Big data will be used with other cutting-edge technologies, such as artificial intelligence.

The NTS commissioner said the service will continuously search for the wealthy who dodge their obligations.

It will monitor information and look especially for changes in wealth.

While getting tough on those violating tax law, the NTS said it will expand its support of small start-ups by providing some tax benefits and minimizing the number of tax audits targeting these enterprises.

The goal is to support the Moon Jae-in government’s drive for an inclusive and fair economy.

“We will be stepping up our inclusive tax support so that the economy will find its vitality,” said the NTS Commissioner Han.

The commissioner also promised to listen to more public opinion in working to create a tax system that can benefit all.

“To bring about changes many people can agree upon, the most important thing will be listening to public opinion and communicating with sincerity,” Han said. “As such, we will be launching a public advisory group on taxation innovation.”

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